Despite an initial slow down, after the latest Feed-in Tariff cuts, the domestic renewable energy sector is picking up momentum again. Government figures for January 2016 show 18,772 solar PV installations, compared to a figure of 8,527 during the same period last year (based on a number of installations in the UK ≤ 4kW, source DECC Solar PV Deployment 25th Feb 2016). The sector is maturing, stabilising and showing sustainable growth, so why have so many lenders left this space?
Domestic purchasers often look to obtain finance in order to spread the cost of their investment in renewable energy products over a term that suits their budget. Being able to offer a loan through a third party lender gives retailers a safe and secure financing option that helps ensure they maximise sales conversion.
Industry growth is strong and there is a clear market need for consumer finance. So why are lenders reticent about lending in the industry?
Paul O’Leary, Partner Director, Ikano Bank states:
“We feel that many lenders have a distorted view of the renewable energy sector, and the risks associated with it. With an emphasis on lenders taking equal liability for responsible sales practices, many have chosen to exit the market, rather than nurture and educate an industry that already exhibits excellent selling behaviours.”
Paul Wingfield, Communications Manager, The Home Insulation & Energy Systems Contractors Scheme (HIES), explains:
“It’s clear that the domestic renewable energy sector is experiencing a period of change driven in no small amount by the latest drop to Feed-In-Tariffs. We have been working with lenders such as Ikano to re-evaluate their relationship with the market place, understanding that they share equal responsibility in ensuring ethical and honest sales practices and nurturing high industry standards. We’re confident if ethical and responsible traders can continue to access high-quality finance that consumers will continue to invest in renewable products.”
Ikano have been working closely with HIES over the past year to ensure that they can effectively and sustainably service the renewable energy sector. Having developed a method of robust vetting, training and compliance support they have ensured that they can manage risk whilst servicing a wide portfolio of respected retailers. The consumer receives the finance that they need, as well as the peace of mind that they are dealing with a reputable and trusted retailer.
Paul O’Leary, Partner Director, Ikano Bank adds:
“We’re proud to be the industry leader in lending to the customers of renewable energy retailers. The renewable industry is arguably one of the most important sectors required to underpin economic growth and sustainability in the UK. No longer are domestic renewable energy investments seen as a quick way to make money; instead, they are viewed as protection against escalating energy prices and a way of living in a more sustainable way. Our retail partners are committed to honest and professional practices and they deserve to be supported in growing their businesses. We’re in this for the long run and we will continue to support, educate and offer investment to grow this industry.”